DoorDash (YC S13) Raises $17.3 Million From Sequoia To Expand On-Demand Delivery(techcrunch.com)
techcrunch.com
DoorDash (YC S13) Raises $17.3 Million From Sequoia To Expand On-Demand Delivery
http://techcrunch.com/2014/05/22/doordash-17-3m-sequoia/
11 comments
I've used DoorDash 3 times in the past few months and they always underpromise and overdeliver. Emails and texts are sent at each stage of the delivery (order, pickup, en-route, driver is 5 mins away), they always beat their estimates and the drivers are very friendly.
The logistics for ensuring food arrives hot when you don't have any control over the cooking process and timing is hard, but they always managed to do it. I'm impressed.
The logistics for ensuring food arrives hot when you don't have any control over the cooking process and timing is hard, but they always managed to do it. I'm impressed.
I don't get this. How often do people order-in from places that don't deliver? Is this a Bay-area phenomenon? Or is this more of a replacement for the restaurant owner's teenager?
There's a lot of great restaurants that don't deliver in the Bay Area (and probably elsewhere). With most startups offering catered lunches and dinners there's a strong demand for delivery of food better than pizza.
Good luck!
Would you mind elaborating on that defensibility claim ("if you look at any of these local businesses, whether they’re Yelp, or Grubhub, or whatever… once they’re built, they’re defensible")?
Why wouldn't this be a race to the bottom where "courier as a service" companies will be lowering prices until competition has eroded profits completely?
(just to be sure, to clarify: I'm genuinely asking out of curiosity - I'm sure if you have both YC and Sequoia backing you, you have some excellent answers for this question)
Would you mind elaborating on that defensibility claim ("if you look at any of these local businesses, whether they’re Yelp, or Grubhub, or whatever… once they’re built, they’re defensible")?
Why wouldn't this be a race to the bottom where "courier as a service" companies will be lowering prices until competition has eroded profits completely?
(just to be sure, to clarify: I'm genuinely asking out of curiosity - I'm sure if you have both YC and Sequoia backing you, you have some excellent answers for this question)
Businesses in local have two-sided network effects. The most famous two-sided network effect is eBay, where the buyers attract the sellers and the sellers attract the buyers. Here you have local businesses and consumers as the two sides. Ideally, you would have long-term, exclusive relationships with the local businesses and offer some loyalty rewards to the consumers.
There are also some interesting scale economics unique to logistics. It doesn't cost much more to deliver to two houses on the same street vs. one house. So as the density of your userbase goes up, your cost per delivery drops. That being said, scale advantages of local delivery do not approach the scale advantages of a wider network like UPS/FedEx. If delivery were the only aspect of the business, I agree that it would be very competitive
Although I do believe local delivery companies are defensible, they are not necessarily a winner-take-all business in every market like eBay or craigslist. Multiple delivery companies can coexist in a local market, each serving a distinct set of restaurants
There are also some interesting scale economics unique to logistics. It doesn't cost much more to deliver to two houses on the same street vs. one house. So as the density of your userbase goes up, your cost per delivery drops. That being said, scale advantages of local delivery do not approach the scale advantages of a wider network like UPS/FedEx. If delivery were the only aspect of the business, I agree that it would be very competitive
Although I do believe local delivery companies are defensible, they are not necessarily a winner-take-all business in every market like eBay or craigslist. Multiple delivery companies can coexist in a local market, each serving a distinct set of restaurants
So if I understand correctly, the plan is eventually to become the "marketplace for food"? We have one here in the high-tech sector around Tel-Aviv (mainly for lunches), this is indeed very defensible. You might be interested to know they apparently built their customer base by saving the employers the hassle of accounting for the lunches for tax purposes - the employer is simply informed of a sum at the end of each month and that's it; they also have a way to limit the expenditure of employees to something reasonable each month.
BTW, this marketplace take wasn't the impression I got from the TC article.
BTW, this marketplace take wasn't the impression I got from the TC article.
Yelp is a "pure play" company that does not involve a real physical component. So are AirBnB and Uber/Lyft: they merely annotate the psychical world. Delivery and shipping is a whole another matter.
What I found interesting is how Sequoia degenerated from funding AMD/silicon to funding food delivery and calling it "tech".
What I found interesting is how Sequoia degenerated from funding AMD/silicon to funding food delivery and calling it "tech".
One could argue that Yelp, AirBnB and Uber all fall into the "marketplace" category of defensibility rationale. At first glance, this doesn't seem (to me) to apply to delivery, as restaurants can always opt-out and build their own delivery operation. This is also a significant source of cost for them, so unlike Uber, where users might be willing to pay a few dollars more for a slick experience, they will likely try to skimp on costs.
Doordash brings delivery + demand (beyond technical chops). That's a lot for a small local restaurant.
Uber wants to expand into logistics.
"The new service [UberRUSH] signals the company's expansion beyond local transportation and into the much larger world of urban logistics. And it's a savvy play for several reasons: The same back-end technology that Uber has built to track drivers and connect them to riders can easily be used to order and follow deliveries."
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/04/08/w...
"The new service [UberRUSH] signals the company's expansion beyond local transportation and into the much larger world of urban logistics. And it's a savvy play for several reasons: The same back-end technology that Uber has built to track drivers and connect them to riders can easily be used to order and follow deliveries."
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/04/08/w...
Sequoia, like all VCs, is funding startups, and startups are defined by growth.
If these guys are growing at such a speed that they are selling $10M worth of food in 10 months, they are growing freaking fast.
If these guys are growing at such a speed that they are selling $10M worth of food in 10 months, they are growing freaking fast.
Congrats to the team!
I respect what you've done so far, but I can't help wondering how investors can base their analysis on an experiment restricted to Palo Alto, Mountain View and San Jose. From what I see, the bulk of orders (in $) are from fellow startups ordering lunch and dinners. Where else is the world (except SF and maybe NYC) do so many companies, in such a small geography, order so much food from restaurants?
I'm not saying it's not a good business. I'm wondering if there is really room for growth (a growth big enough to justify the huge series A valuation) outside of very specific geographies.
I respect what you've done so far, but I can't help wondering how investors can base their analysis on an experiment restricted to Palo Alto, Mountain View and San Jose. From what I see, the bulk of orders (in $) are from fellow startups ordering lunch and dinners. Where else is the world (except SF and maybe NYC) do so many companies, in such a small geography, order so much food from restaurants?
I'm not saying it's not a good business. I'm wondering if there is really room for growth (a growth big enough to justify the huge series A valuation) outside of very specific geographies.
Well, you are talking about over a million people in that area. I'd say that's a reasonable sample size. Also, not sure we know who their clientele are. We use doordash for the office, but I also use it at home. Because of their level of service it has also become a destination site, where I go to see what they offer first rather than choosing the restaurant I want first. I imagine I am not alone.
Well, look at Seamless. It's quite possible to just have a business that focuses on these major metro areas.
That said, I'd still be dubious of a company that only operates in California. Markets like Chicago and NYC are quite different.
That said, I'd still be dubious of a company that only operates in California. Markets like Chicago and NYC are quite different.
Based on the heatmaps, it looks like the customer base is highly concentrated amongst apartment dwellers and students.
Having said that, we live in a house in Palo Alto and my wife is a big fan, to avoid cooking or eating out with small children :-)
Having said that, we live in a house in Palo Alto and my wife is a big fan, to avoid cooking or eating out with small children :-)
Some college towns will have a high density of students ordering food from restaurants.
I've never seen a restaurant post a menu on its website with different prices than what you would find in person, however this is exactly the business model of DoorDash. My question is, why don't restaurants do this? Is it illegal? Out of laziness? A tacit custom? Genuinely curious about this.
(I work at DoorDash)
For restaurants that we haven't yet partnered with, we have a slightly increased price in order to pay for the cost of delivery. However, many of our restaurants pay this fee as a commission, and the price on our website is the same as at the restaurant.
We try to be very upfront about this price difference for our customers. For more info, see https://www.doordash.com/faq/#question4.
For restaurants that we haven't yet partnered with, we have a slightly increased price in order to pay for the cost of delivery. However, many of our restaurants pay this fee as a commission, and the price on our website is the same as at the restaurant.
We try to be very upfront about this price difference for our customers. For more info, see https://www.doordash.com/faq/#question4.
Impressive. Does each restaurant have a DoorDash tablet, or do the orders get transmitted via phone/fax?
What makes DoorDash different than all the other Delivery startups out there?
Based on the article, the fact that their customers love them. Of course, it's not hard to have customers that love you at the early money-hemorrhaging stage - the tough bit is continuing to be loved once you're turning a profit.
Congrats guys!
Congrats, guys!
Also they feed me! (that was one of the key questions I asked during interviews: "Will you deliver to my house?" They answered correctly! :)